Consumers saved less during December

by Richard Kilner

Story link: Consumers saved less during December

Consumers are reducing their saving, according to Nationwide.

The building society has reported that during the build up to Christmas saving declined in importance for consumers, and that one in four are not saving anything at all.

In addition, less than half (45%) save regularly.

A combination of Christmas shopping and the impending VAT rise meant that Christmas and the days and weeks before it saw saving become less important to consumers as they opted to spend instead.

Saving is occurring less often, a trend which Nationwide has stated it would like to see reversed.

Savings head Andy Hutchinson added that many consumers will have used December to buy large items, avoiding the extra 2.5% on VAT.

Hutchinson went on to say that the numbers saving were at a recent low, but attributed this partly due to seasonal variation and partly due to the record low interest rate of 0.5%.

December also saw a decline in consumer confidence, bucking the trend of 2009 which saw a net improvement overall.

Nationwide’s Chief Economist Martin Gahbauer cited tax changes, including the well-publicised return of VAT to 17.5%, as a primary cause of falling confidence in the festive season.